I have the same problem. It happened when i was using max ripper to rip a CD... then I opened iTunes to download a podcast. iTunes tried to access the CD that was being ripped and it made a loud spinning noise and spit the CD out. I re-inserted it and now I have the same symtoms you're describing. After inserting a CD or DVD, about 10 seconds later, it spits it out. It's out of warranty, and I talked to a guy at an Apple store who said it sounded like the drive would have to be replaced, and buying an external was a cheaper alternative. Luckily I already had an external drive so my old G4 laptop could burn dual layer DVDs, so this is an inconvenience... but now that I had some spare cash, I was entertaining getting it fixed when I discovered there were many others experiencing similar problems.
It's almost acting as if the EJECT button was being held down. (I havent tried using a second keyboard yet to see if the key is broken, but this is doubtful as I said it happened when ripping a CD). I have tried doing a clean reinstall, even though i was sure it was a hardware related problem... Is there any diagnostic tool to run to see if everything is functioning properly?
Any ideas would be appreciated.
David